Payment life cycle (2024)

There are three stages to payment processing: validation, reservation,and finalization. The payment life cycle is related to the order life cyclestages: order capture, release to fulfillment, and shipping.

validation
Ensures that a customer has adequate funds to make the purchase. The paymentaction depends on the customer's payment method. For instance, when a customerpays for a purchase using a credit card, a credit card authorization is sentand if it is valid, the transaction is approved. This process occurs duringan order submission.
reservation
Ensures that funds are available before shipment of the goods. Thereservation amount is the sum of all order release amounts. This process occursduring a release to fulfillment.
finalization
Payment finalization is typically driven by a shipment confirmation messagefrom or on behalf of the fulfiller. This process occurs when the goods areshipped for the order release.

An order can have multiple releases if itemsin the order must be shipped from different warehouses or use different carriers,or if some of the items need to arrive at different times, such as for anexpedited item. Additionally, a customer can group order items in the sameorder to ship together, including backordered items or future shipments.

Consider an example using the Early Approval payment rule.The PrimePaymentCmd payment action is "approve." The order consists of twoitems, a sweater (60 U.S. dollars) that is currently available and a shirt(40 U.S. dollars) that is available in one week. In this example, there aretwo releases for the order: one for the sweater and another for the shirt.

  • Payment validation (order capture)

    60 U.S. dollars is validated becauseonly the sweater is available.

    At payment validation (the PrimePaymentCmdcommand), the Payment rules engine determineswhat payment actions to take to achieve the target state for the initialamount.

  • Payment reservation (release to fulfillment)

    If the release for thesweater is released to fulfillment, the payment reservation amount contains60 U.S. dollars.

    At payment reservation (the ReservePaymentCmd command),the Payment rules engine determineswhat payment actions to take to achieve the target state for amountsto be reserved.

    Note: The last-chance-edit operation is notsupported. For example:

    1. The shopper submits an order with two sweaters and the sweaters are releasedto fulfillment where the Reverse Payment is run.
    2. The shopper wants to remove one sweater from this order.
  • Payment finalization (shipping)

    If the release for the sweater is shipped,the payment finalization amount contains 60 U.S. dollars. At payment finalization(the FinalizePaymentCmd task command), the Payment rules engine determineswhat payment actions to take to achieve the target state for amountsto be finalized.

    Then after one week, the other order item of the shirtis in stock, it needs to Scheduling the ProcessBackorders job jobto validate the payment. The process flows for this order item at PaymentReservation and Payment Finalization Stage are similar with the order itemof the sweater.

Payment life cycle (2024)

FAQs

Payment life cycle? ›

There are three stages to payment processing: validation, reservation, and finalization. The payment life cycle is related to the order life cycle stages: order capture, release to fulfillment, and shipping. Ensures that a customer has adequate funds to make the purchase.

What is the life cycle of a bank transaction? ›

The acquiring bank will then send the payment request to the issuing bank (customer's bank) for payment approval. If the payment is approved, the issuing bank will transfer the funds to the acquiring bank, and the acquiring bank will deposit the funds into the merchant's account.

What is the life cycle of a card payment? ›

Like the four primary moon phases are a part of the circle of life, there are four significant steps involved in any credit card life cycle, no matter what type of transaction has been processed. This includes payment authorization, batching, clearing, and settlement.

What is the life cycle of a transaction? ›

The transaction lifecycle describes the actions you can perform on a transaction before the debtor close date. Once the debtor close date for a transaction has passed, the transaction is locked and you cannot make any changes to it.

What are the phases of payment? ›

What are the stages of a payment? How does payment processing work?
  • A payment is made. This is the point at which your client makes the payment through your Joist estimate or invoice by credit card. ...
  • The checkout is verified. ...
  • The funds are stored. ...
  • The funds are released. ...
  • The funds are captured. ...
  • The funds are received.

What are the 5 most common transaction cycles? ›

The Transaction Cycle model is one way to view basic business processes. The purpose of The AIS Transaction Cycles Game is to provide drill and practice or review of the elements that comprise the five typical transaction cycles identified as: revenue, expenditure, production, human resources/payroll, and financing.

What are the 4 four basic accounting transaction cycle? ›

The first four steps in the accounting cycle are (1) identify and analyze transactions, (2) record transactions to a journal, (3) post journal information to a ledger, and (4) prepare an unadjusted trial balance. We begin by introducing the steps and their related documentation.

What are the 5 stages of transaction processing cycle? ›

Transaction processing systems generally go through a five-stage cycle of 1) Data entry activities 2) Transaction processing activities 3) File and database processing 4) Document and report generation 5) Inquiry processing activities.

What are the three cycles of transaction processing? ›

similar types of transactions are grouped together into three transaction cycles:
  • the expenditure cycle,
  • the conversion cycle, and.
  • the revenue cycle.

What are the payment statuses? ›

The payment status represents the last action that was submitted on a payment. There are three possible transaction statuses: Succeed. Failed. Pending.

What are the 5 mode of payments? ›

A payment can be made in the form of cash, check, wire transfer, credit card, or debit card. More modern methods of payment types leverage the Internet and digital platforms.

What is the order of payment? ›

Definitions of order of payment. a document ordering the payment of money; drawn by one person or bank on another. synonyms: bill of exchange, draft.

How long do transactions stay on bank statements? ›

For any deposit over $100, banks must keep records for at least five years. Banks may retain these records for longer periods if they choose to do so.

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